Question

Determining Lower of Cost or Net Realizable Value (NRV)

Crane Company had the following inventory at December 31, 2017.

	Unit Price
	Quantity	Cost	NRV
Desks
Model 9001	70	$190	$210
Model 9002	45	280	268
Model 9003	20	350	360
Cabinets
Model 7001	120	60	64
Model 7002	80	95	88
Model 7003	50	130	126

a. Determine the ending inventory amount by applying the net realizable value rule to:
1. Each item of inventory.
$Answer

2. Each major category of inventory.
$Answer

3. Total inventory.
$Answer

Answer 1

				Lower of Cost or market
Req 1	Product	Cost	NRV	By Individual product	By product category	By Total Inventory
	Desks
	Model 9001	13,300	14,700	13,300
	Model 9002	12,600	12,060	12,060
	Model 9003	7,000	7,200	7,000
	Total	32,900	33,960		32,900
	Cabinets
	Model 7001	7,200	7,680	7,200
	Model 7002	7,600	7,040	7,040
	Model 7003	6,500	6,300	6,300
	Total	21,300	21,020		21,020
	Total	54,200	54,980			54,200
	a)	Individual product	52,900
	b)	Product category	53,920
	c)	Total Inventory	54,200